The Lagrangian method of optimization results in a new variable,$\lambda$,called the Lagrangian multiplier,which shows the addition to total utility from an additional unit of income.In other words,$\lambda$ expresses the:
A)the budget constraint.
B)the cost of acquiring an additional util of satisfaction.
C)the marginal utility of income.
D)the optimal level of utility.

Question

Quizplus · Accepted Answer

The Lagrangian multiplier, λ, represents the marginal utility of income. It is the amount by which total utility increases when an additional unit of income is received. Therefore, the correct answer is C.

The Lagrangian Method of Optimization Results in a New Variable λ\lambdaλ

The Lagrangian Method of Optimization Results in a New Variable $\lambda$